Survey Says: U.S. Softwood Lumber Producers Temper Outlook for 2026-27

U.S. softwood lumber producers are entering 2026-27 with a slightly less optimistic outlook than they held a year ago, according to Timber Processing’s 2026 Annual U.S. Sawmill Operations & Capital Expenditure Survey.

Only 38% of respondents described their outlook as excellent or good, down from 44% in last year’s survey. Meanwhile, 56% expect conditions to be fair and 6% anticipate poor business conditions.

The survey, conducted in May, drew responses from companies operating approximately 130 U.S. sawmills.

Many respondents pointed to interest rates, housing starts and broader economic conditions as the biggest factors influencing demand.

“The fate of the lumber market will depend on the state of the overall economy,” said Patrick Harrigan, president of Harrigan Lumber. Others cited stagnant housing activity, oversupplied southern yellow pine markets and lingering uncertainty as key concerns.

Labor& Market Challenges Persist

Flat lumber markets ranked as the industry’s biggest challenge, cited by 53% of respondents. Labor shortages followed at 43%, while 41% pointed to shipping and logistics issues.

Finding skilled employees remains a major concern, particularly as mill equipment becomes increasingly automated and complex. To improve retention, companies are turning to incentive programs, wage increases and flexible schedules. One respondent reported improved morale and productivity after shifting employees to a four-day workweek.

Mills Continue Investing

Despite market headwinds, capital spending remains strong.

Nearly two-thirds of respondents completed a capital project in 2025, while 48% have committed at least $1 million in new investments for 2026-27.

Popular investments include forklifts, conveyors, dry kilns, log-handling equipment, data collection systems and fire prevention technology. Eighteen percent reported plans to invest in artificial intelligence-related technologies.

The survey also found that 19% of respondents have started a new sawmill or production line within the past two years, while another 18% are currently building one.

Mixed Views On Policies

Respondents expressed differing opinions on Trump’s tariff policies. While some expect tariffs to strengthen domestic lumber demand, others believe they are contributing to economic uncertainty.

The administration’s effort to increase timber sales from federal lands received a more favorable response, with 59% saying the policy could provide at least some benefit to the industry.

The Bottom Line

The industry’s outlook may be more cautious than it was a year ago, but softwood lumber producers continue to invest in equipment, technology and expansion projects.

The message from this year’s survey is clear: While lumber markets remain challenging, sawmills are positioning themselves for the next upswing rather than waiting on the sidelines.

The full findings of Timber Processing’s annual capital expenditure survey, collected and analyzed by Rich Donnell, are published in the June issue of the magazine.